The importance of tailoring microfinance to women

VisionFund International stresses the importance of tailoring
microfinance services to women

By Annalisa Plachesi and Miranda Barham, WAM Steering
Committee

Last month, VisionFund’s Director of Social Performance,
Johanna Ryan, spoke at a Women Advancing Microfinance dinner in London. Here is
a recap of the event, including a detailed description of the newly launched
Women’s Empowerment Fund.

In opening the dinner, Johanna Ryan introduced the stories
of two VisionFund clients, Donatila and Claudine. Donatila, 60 years old from Rwanda
looks after seven children. After the sudden death of her first husband, she
remarried but her second husband left her.

“When talking to Donatila, I remember her describing her
sorrow as she had nothing and - in her own words – she was ‘just an old woman
without a husband with no means to provide for the children,’” Johanna
explained. Donatila was then introduced to VisionFund and managed to get a $45
loan to trade sorghum in her local market. With her profits she managed to buy
salt and onions to feed her family and to cover school fees for her children.

Claudine, who is 25 years old and also from Rwanda, took out
a $300 loan and started to sell milk and manure. She made enough money to have
her floor cemented, and to purchase clothing. “Claudine has a dream,” Johanna
continued, “and it is to see her children grow up to be mayors, governors and
members of parliament, whether they are boys or girls.”

Forty-two per cent of women globally are outside the formal
financial system[1]. Forty per cent of the global agricultural
labour force is female, a figure that rises to 50% in Africa and Asia[2].
Of 780 million illiterate people, two-thirds are women[3].
It is these statistics combined with the ambition described by women like Claudine
that have driven VisionFund to launch the Women’s Empowerment Fund, a new
initiative to empower two million women by 2021.

The Fund is a bold vision to raise $25 million to
financially empower two million women and create brighter futures for six
million children annually by 2021. VisionFund will achieve this by:

Strengthening
links to savings for women

Savings provide a safety net to
deal with emergencies as well as family events like births and deaths.

Developing
insurance products that specifically protect women

Microinsurance helps protect
clients, their investments and businesses against untimely and unexpected
shocks. To respond to some of the specific challenges facing women, VisionFund
is developing products such as health insurance with maternity coverage, crop
insurance for women without land titles, and life insurance for spouses and
children.

Bringing mobile banking to
rural areas

Rural areas are hard to reach
and costly to serve. For women, this investment will mean increased personal
safety as they will not have to travel with relatively large amounts of cash.
It will mean confidentiality as they will not be seen in the branches, which is
an issue for women because otherwise they are likely to be asked for money from
other members of the community. Also, it gives them greater control over their
finances as they can manage them from their home. For some women, depending on
the cultural context, it is not easy for them to move around freely. It also
provides VisionFund with convenient delivery channels and the opportunity to
collect and analyse data, which will be used to improve their products and
services.

Expanding
access to financial education for women

Whilst
nearly 33 per cent
of VisionFund’s clients received financial education in 2016, with a new
delivery system for financial education, VisionFund plans to reach 75 per cent
by 2021.

Creating
family-friendly branches

These
branches will allow mothers to care for their children while they wait in line
without, for example, being under searing sun, and developing practical guidelines for
improving outreach and service to women, especially mothers, prioritizing
women’s needs for confidentiality, privacy, and respect.

Developing
financial products tailored for women

Products
should adequately
serve the needs of all VisionFund’s clients, with a focus on the needs of women
and mothers. This will be represented in the development of new products that
focus on fuel-efficient cook stoves, household water filters, latrine
construction, solar energy products, and children’s education.

One of the ways that VisionFund
will tailor its services to be more women-friendly is by recruiting older
women, from the communities it works in, to become loan officers. These women
will automatically understand the challenges and local context that VisionFund’s
female clients face and will therefore be able to provide services in a more
sensitive and sympathetic manner.

“Many older women don’t necessarily feel
comfortable speaking with a 25 year-old male loan officer,” explained Johanna.
“It can be a barrier to them opening up and giving us the real picture of their
lives.” This matters for VisionFund as its fundamental rule of client
protection is, ‘we do no harm,’ and they adhere to other strict client
protection principles. Taking the time to get a full and honest picture of the
client’s financial, business and familial situation is critical to
understanding how the client can benefit from a loan or other financial
services product and how it can be tailored to individual requirements.

Understanding
and improving the impact of their work on women and families is very important for
VisionFund. It plans to use rigorous academic and professional research to
further understand how it impacts its clients, and will focus on adjusting existing
services to better meet the specific requirements of women in their local
context, as well as create new products to help more women and their families
climb up the economic ladder.

”For
women like Donatila and Claudine,” Johanna added, “empowerment means living a
better life than what they experienced before.”

With
access to financial services and training, along with encouragement from their
communities, women with few other resources can change their world and the
future of their children. Starting with today’s women, for the women of
tomorrow.